Oil & Gas company, Seplat, has signed a deal with Waltersmith Petroman Oil Limited to begin crude oil refine locally. The Crude Purchase Agreement (CPA) is expected to reduce the cost of Seplat and boost its earnings during the period of the contract.
Waltersmith Petroman is the majority shareholder and owner of the Waltersmith Modular Refinery that was commissioned for operation by President Muhammadu Buhari in late November, 24, 2020. Prior to the Crude Purchase Agreement, Seplat exported its crude and import the refined product.
AllNews gathered during the export, Seplat usually suffers crude losses and downtime along the evacuation and export route. The crude oil is sourced from Seplat's Ohaji South Field within OML53, however, the agreement with Waltersmith will reduce its loss of investment, as refining will now be done locally.
It was learnt that Seplat will supply between "2,000 and 4,000 bopd from existing working-interest production from the Ohaji South Field within OML53" for Waltersmith’s modular refinery which is located at Ibigwe Field, in Imo State.
This is, however, a fraction of the crude Seplat produces every year, as the company maintains 48,000-52,000 boepd for the 2020 financial year. While speaking on the agreement, Seplat Chief Executive Officer, Roger Brown, said aside losses on the export pipeline being eliminated by the deal, it will also enable the company increase its workforce.
"We are delighted to sign this Crude Purchase Agreement with Waltersmith as it ensures that Nigerian crude will be refined locally by a Nigerian refiner. The agreement will eliminate losses we previously experienced on the export pipeline, meaning more revenue will be booked by Seplat for the same amount of oil produced from the field. Waltersmith’s refinery will also benefit the Nigerian economy by creating local jobs to refine our oil."
AllNews gathered that the Waltersmith Modular Refinery has a capacity of 5,000 barrels per day, and work is ongoing to increase production capacity to 50,000 barrels per day. It produces 271m litres of refined petroleum products annually.
In a statement seen by AllNews, the Waltersmith refinery Second Module will be 25,000 barrel per day, while the Third Module is 20,000 barrel per day.
Nigeria own 30% equity of the refinery, while Waltersmith Petroman Oil Limited owns 70%. Nigeria plan to ensure 10% of Nigeria’s crude and condensate production is refined through modular refineries.
It has already delivered 5 million litres of product into the Nigerian market, according to the company - Waltersmith had approached the Federal Government in 2018 for the modular license.